Could someone please help?
I have to compute the profit margin for the following:
Net income Net Sales
A. $4,390 $44,830
B. 97,644 398,954
C. 111,385 257,082
D. 65,234 1,458,999
E. 80,158 435,925
I think (check your text) you use
Net Profit Margin = Net Income / Net Sales
There are other ways to calculate it too, but I think that's the basic formula to use here.
Sometimes revenues is used to mean net sales.
To compute the profit margin, you indeed use the formula:
Profit Margin = (Net Income / Net Sales) * 100
We will apply this formula to the given options one by one:
For option A:
Profit Margin = (4,390 / 44,830) * 100 = 9.8%
For option B:
Profit Margin = (97,644 / 398,954) * 100 = 24.5%
For option C:
Profit Margin = (111,385 / 257,082) * 100 = 43.4%
For option D:
Profit Margin = (65,234 / 1,458,999) * 100 = 4.5%
For option E:
Profit Margin = (80,158 / 435,925) * 100 = 18.4%
So, the profit margins for the given options are:
A. 9.8%
B. 24.5%
C. 43.4%
D. 4.5%
E. 18.4%